Owners mothball Liepāja steelworks, plan to lay off 300

Ukrainian investor KVV Group has been forced to take a decision on the suspension of production at the KVV Liepajas Metalurgs metallurgical plant, the group's spokeswoman Natalia Napadovska told LETA Friday. Later in the day LETA reported via the City Council of Liepāja that the company plans on sacking 300 employees, keeping 100 "on-duty" or on demand. 

Mayor Uldis Sesks had been informed about the move by KVV Liepajas Metalurgs board member Igor Talanov. These are only estimates at the moment.

The news come on the 391th anniversary of the town's founding.

The management of the KVV Group cited negative factors hampering the company's operations - the crisis in the global metal industry, the company's debts to secured creditors and the Latvian government's reluctance to provide assistance to the industry.

Despite the difficulties, the company's shareholders had been trying to resume productions and start a constructive dialogue with the government, Napadovska said.

The shareholders worked out a debt restructuring plan and expected the government to provide comprehensible answers about possibilities to cut the electricity price for the company. "The management of the KVV Group repeatedly stressed that the company's rescue plan met Latvia's interests".

"We based our plans an assumption that the shareholders and the state have one common interest - to preserve one of Latvia's largest taxpayers, to develop the metallurgy and ferrous metal industry, to preserve jobs for hundreds of people," said KVV Liepajas Metalurgs board member Igor Talanov.

"Unfortunately, all we saw was the government increasingly distancing itself from the company's problems," Talanov said.

While in January, as Latvian Radio reported, former Economics Minister Dana Reizniece-Ozola chided the owners of the plant for what she perceived to be big demands.

Reizniece-Ozola said it seems the company has the impression it can ask the state for different bargains, and the head of the government will submit to any changes with a quick signature. 

LETA reported that on March 1 KVV Liepajas Metalurgs submitted to the Treasury a restructuring plan as requested to do so by the Latvian government at the beginning of February. 

KVV Group is considering possible suspension of operations at KVV Liepajas Metalurgs and conservation of the steel plant, if the Latvian Cabinet of Ministers did not make any constructive decisions during its March 15 meeting.

So far the government has recovered one-fifth of the amount it had paid previously to Italian bank UniCredit when the steel plant could not repay to UniCredit a state-guaranteed loan.

Despite several false dawns, production at the plant has failed to get into full swing with questions asked about the ability of its owners to effectively manage the company which is the largest employer in Latvia's third-largest city, Liepaja.

Liepajas Metalurgs was declared insolvent and later sold to Ukrainian investors, KVV Group. Liepajas Metalurgs was renamed KVV Liepajas Metalurgs and officially re-opened on March 6, 2015, but soon started having problems again.

In late December, 2015, it missed a payment of EUR 2.7 million to the Treasury, one of the installments to be paid to the Latvian government over the next 10 years, and asked the government for a two-year extension of the payment deadline.

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